Organic growth rate 'eclipsing' conventional

11/03/2011 03:40:00 PM
Coral Beach

Slow growth vs. no growth has been the trend for organic vs. conventional fresh produce in recent history, and industry observers see potential for organics to maintain their edge.

A number of factors contribute to that potential, including increasing availability because of U.S. growers converting acres to organic production. Expanding import deals make year-round availability a reality to further boost organics.

Lutz“The growth rate for organic is eclipsing conventional produce, partly because of better distribution,” said Steve Lutz, executive vice president of Chicago-based The Perishables Group.

Another factor has been so-called natural grocers, who paved the way in organic produce.

But the growth opportunities are with conventional grocers now, according to Dick Spezzano, owner of Spezzano Consulting Inc. He said the double-digit growth organic produce sales saw before the recession has slowed to about 6%, but is poised to gain steam.

Blake Belknap, organics sales manager for Rainier Fruit Co. in Selah, Wash., agreed that conventional retailers are where the growth is happening.

“We used to do just pallet quantities,” Belknap said. “Now we have full on 40-week programs at (two major retailers).”

Stemilt Growers LLC in Wenatchee, Wash., has so much faith in the potential for organic sales in conventional supermarkets that marketing director Roger Pepperl said he expects double-digit growth in the coming year.

“The organic-oriented supermarkets did a good job of raising awareness and raised the bar from the beginning,” Pepperl said. “The interest of regional and national conventional chains is really picking up. We are getting more customers wanting full-blown organic programs.”

Courtesy SuperValuSuperValu Inc. spokesman Mike Siemienas said the chain's 1,000 grocery stores have found success with the private label Wild Harvest organic line because consumers like the competitive prices it provides.For the various retail banners of Supervalu Inc., organic produce assortments vary from store to store, but one thing has been consistent in the past couple of years. Almost every category of organics has seen flat sales, according to Mike Siemienas, Supervalu spokesman.

“Local harvest is trumping organic in many stores,” Siemienas said.

But don’t look for Supervalu to back off of organics. The private label Wild Harvest is Supervalu’s organic house brand, which has been available for several years. Fresh commodities include baby cut carrots, sweet grape tomatoes, arugula and potatoes. Siemienas said consumers like it because they can have organics with the advantage of private label prices.

Cost remains an issue for organic produce. Lutz said The Perishables Group has found retail prices average 20% to 30% higher for organics.

At least one recent survey of more than 2,000 adults suggests consumers are willing to pay for premium foods. The survey by Harris Interactive on behalf of Whole Foods Markets Inc. logged 74% of respondents indicating they would not compromise on the quality of the food they buy because of the economy.

The survey asked how many intended to continue to buy natural and organic food and 72% said they would not change their buying habits. And, 70% of the survey participants said they would “find ways to be able to buy natural and organic foods within their budgets.”



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